Introduction
The United Arab Emirates (UAE) has been a popular destination for foreign investors and businesses for many years due to its strategic location, business-friendly policies, and tax-free environment. The UAE Corporate Tax Law has been introduced as a regime to ensure the sustainability of its economy.
Registration for UAE Corporate Tax
As per the decision by the FTA, a Qualifying Public Benefit Entity must apply for Tax Registration and obtain a Tax Registration Number by 1st October 2023.
On the other hand, as per Article 2(2), the following entities must apply for Tax Registration and obtain a Tax Registration Number by 1st June 2024, namely,
- A Qualifying Investment Fund,
- A public or private pension or social security fund,
- A juridical person entirely owned and controlled by certain Exempt Persons in the UAE, and
- Any other person specified by the Cabinet (at the suggestion of the Minister)
Do you need help with your UAE Corporate Tax registration application? CONTACT US TODAY.
Application for Exemption After Approval of Tax Registration Application
If the FTA approves the application for Tax Registration, the following entities may submit an application for exemption from Corporate Tax under the UAE Corporate Tax:
- A Qualifying Investment Fund,
- A public or private pension or social security fund,
- A juridical person entirely owned and controlled by certain Exempt Persons in the UAE, and
- Any other person specified by the Cabinet (at the suggestion of the Minister)
Note: This is only if the conditions to be considered as an Exempt Person under UAE Corporate Tax are satisfied by the entity.
Filing of Annual Declaration
Also, the FTA may request the Exempt Persons to file an annual declaration to confirm that they meet the exemption conditions.
Timeline for Exemption Application
Entities as per Article 2(2) must apply for exemption within 60 business days from the end of the Tax Period in which they met the exemption conditions.
Approval of the Application: If the application for exemption is approved by the FTA, the exemption will be effective from the start of the Tax Period mentioned in the application.
Determination of Alternative Effective Date of Exemption by FTA
However, the Authority may determine an alternative date for the effective date of the exemption under certain scenarios.
1. Tax Period specified is incorrect: If the Tax Period specified is incorrect, the exemption will be effective from the correct date.
2. Applicant is acquired by certain categories of Persons: During a Tax Period, if the applicant is acquired by one or more Persons of the following persons:
- A Government Entity
- A Government Controlled Entity
- A Qualifying Investment Fund
- A public or private pension or social security fund
Then, if the conditions for exemption are not met, the exemption will not be given from the start of the Tax Period.
FTA to determine the effective date: In such a case, FTA will determine another date from which the exemption will be given. This will be after ensuring that all the remaining tax obligations are fulfilled.
3. Tax Period mentioned is incorrect and supporting evidence is provided: Where the Tax Period mentioned in the application for exemption is incorrect. Further, the FTA receives sufficient evidence that the conditions have been met at a later Tax Period. In such a case, the exemption will be effective when the conditions are fulfilled.
4. Other Instances: Any other instances as per the decision issued by the Cabinet.
Want to know if your entity is exempted from UAE Corporate Tax? Check out the CONDITIONS OF AN EXEMPT PERSON.
Abrogation of conflicting provisions
Article 4 states that any provisions that contradict or are inconsistent with the provisions of this decision shall be abrogated. This means that any existing regulations that conflict with the provisions of this decision will be revoked.
Moreover, the purpose of Article 4 is to ensure that there is no conflict between existing laws and the provisions of this decision. Additionally, by abrogating any conflicting provisions, the decision can be implemented effectively without any legal obstacles or conflicts.
Implementation of Decision
Article 5 states that this decision shall be published in the Official Gazette and shall come into effect as of June 1, 2023. This means that the Decision will be legally binding and enforceable from that date onwards.
Further, the purpose of Article 5 is to ensure that the decision is implemented and enforced as per the specified timeline. Additionally, by publishing the decision in the Official Gazette, the general public will be informed of its existence and its effective application.
Conclusion
In conclusion, the decision provides for the UAE Tax Registration for certain categories of entities and applications for exemption. Further, it provides details about exemption applications and its effective date.
